PRECIOUS-Gold rises on European poll worries; investors wait for Fed

Reuters Staff

3 Min Read

* Dutch elections provide safe-haven support
* Markets look for pace of U.S. rate hikes in 2017
* SPDR Gold holdings rise for second straight session
(Adds comment, updates prices)
By Sethuraman N R
March 15 (Reuters) - Gold prices edged up on Wednesday on
safe-haven buying due to uncertainty over the outcome of Dutch
elections, while markets waited for clues on the pace of U.S.
interest rate hikes this year.
With an immediate rate increase by the Federal Reserve seen
as a done deal, investors are focusing on what message the
central bank will deliver when it concludes a two-day meeting on
Wednesday. In December, the Fed forecast three rate rises this
year.
Spot gold had edged up 0.4 percent to $1,203.31 per
ounce by 0608 GMT.
U.S. gold futures rose 0.1 percent to $1,203.30 per
ounce.
"We do not think much will change throughout much of
Wednesday ahead of the Fed rate decision and policy statement,"
said INTL FCStone analyst Edward Meir.
"Our bias is still somewhat constructive on gold given that
we think the Fed will shrink from coming across as too
aggressive."
The statement from the Fed, due at 1800 GMT on Wednesday,
will be followed by a briefing at 1830 GMT.
Investors were also focusing on Wednesday's Dutch elections,
which have been boosting gold's safe-haven appeal.
The Party for Freedom is seen as having little chance of
coming to power, but a strong election performance for the group
that says it wants to "de-Islamicise" the Netherlands would fuel
worries over a surprise result in French presidential elections
in April and May.
"We expect the bullish bias to continue throughout the
session as the Dutch election gives the yellow metal a slight
safe-haven bid," said Jeffrey Halley, senior market analyst at
OANDA.
Critical support for gold held around $1,180, analysts said.
Prices have fallen over 5 percent since gold failed to
sustain a break above its 200-day moving average at around
$1,261 in late February.
In Britain, concerns have increased over a second Scottish
independence referendum and the triggering of Article 50, which
would formally begin British negotiations to leave the European
Union.
Holdings of SPDR Gold Trust , the world's largest
gold-backed exchange-traded fund, rose 0.36 percent to 834.99
tonnes on Tuesday from Monday. Holdings rose for a second
straight session after outflows last week.
"Positioning seems to be fairly neutral at present so we
feel that (a rate hike hike) will keep downward pressure on
metals," said MKS PAMP Group trader Alex Thorndike.
Spot silver rose 0.5 percent to $16.92 an ounce.
Platinum was up 0.9 percent at $940.70, while
palladium was firm at $743.83. Palldium prices hit their
lowest since Jan. 31 at $738.35 the session before.
(Reporting by Nallur Sethuraman in Bengaluru; Editing by Joseph
Radford and Richard Pullin)